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How much would net income be misstated

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Problem - You are presented with the following December 31, 2020 unadjusted trial balance and additional information for Webb Industries. All accounts carrying a balance are shown and all accounts have normal balances.

Accounts Payable $28,000

Accounts Receivable $46,000

Cash $75,000

Common Stock $80,000

Dividends $5,000

Equipment $60,000

Prepaid Rent $12,000

Retained Earnings $80,000

Service Revenue $20,000

Supplies ?

Unearned Revenue $8,000

Wages Expense $14,600

Information needed for adjustments -

1. Prepaid Rent was recorded on November 1st when the company paid rent in advance for November 1st through April 30th.

2. A count of supplies on December 31st revealed that $125 remained.

3. A client paid $8,000 in advance on December 2nd. At the end of the year, 75% of that value had been earned.

If the accountant failed to record any adjusting entries, how much would 2020's net income be misstated?

Reference no: EM132804710

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